The present invention generally relates to consumer credit arrangements used when purchasing goods or services, and more particularly to a method and system for issuing credit that minimizes potential credit card fraud or theft when consumers are purchasing goods or services.
Electronic commerce is a rapidly growing way of conducting business. This growth is further fueled by use of the Internet. Notwithstanding this growth in electronic commerce, products and services are still purchased in person at established retail locations. Most people pay for these endeavors by using an assortment of credit cards, cash, and checks. Currently, the best commerce tool available for bridging the gap between on-line and off-line worlds of commerce is a credit card. Credit cards allow the same payment mechanism in both worlds, primarily because they offer fast and remote authorization. However, credit cards also suffer the drawbacks of providing a lack of anonymity, fraud potential (especially on-line), and expensive fees.
One solution is to use so-called xe2x80x9csmart cardsxe2x80x9d which are designed to be just as flexible and safe as cash, yet offer the electronic benefits of credit and debit cards. Though achieving some success in Europe, the use of such smart cards has not been generally accepted in the US, partly due to the public""s reluctance to give up their loyalty and incentive credit card programs while finding room for another card in their already crowded pocketbook. Vendors and banks balk at the high cost of creating the infrastructure to support smart card applications. Furthermore, since traditional credit cards are the current method of electronic commerce, use of smart cards would reduce the overall cost of central transaction authentication, which otherwise forms a significant profit source for traditional credit card issuers.
Credit card companies currently have centrality in the burgeoning hybrid electronic/off-line commerce world, and the fees they collect from merchants for transactions and from consumers in debt financing are substantial. However, the customer no longer seeks prestige with traditional credit cards, but rather convenience, safety, and worthwhile incentives among their infinite choices in the competitive marketplace. Therefore a need exists for an alternative manner of conducting payment in commercial transactions which is as convenient as a credit card, but safer and more cost effective.
It is therefore an object of the present invention to provide a system and method for issuing credit in a consumer transaction which eliminates the need for the consumer to carry a credit card.
It is another object of the present invention to provide a system and method for issuing credit in a consumer transaction which minimizes the potential for theft or fraudulent use of the credit.
It is yet another object of the present invention to provide a system and method for issuing credit in a consumer transaction which maximizes convenience to the consumer without requiring a credit card.
It is still another object of the present invention to provide a system and method for issuing credit in a consumer transaction which minimizes the potential for theft or fraudulent use of the credit by generating temporary, single transaction credit card numbers.
It is yet another object of the present invention to provide a system and method for issuing credit in a consumer transaction which utilizes a mobile phone or a personal computer (PC) as a way of generating credit card numbers that are valid for only a single transaction.
In accordance with these and other objects, the present invention provides a method for issuing credit as payment in a consumer transaction between a consumer and a vendor that includes initially making a request for issuance of a credit transaction number concurrent with the consumer transaction, where the request includes information regarding the transaction amount, and identification of the customer and vendor. In response to the request, a unique credit transaction number is randomly generated if the request is acceptable, where the unique transaction number is only valid for a predetermined period of time and for the requested transaction. The generated credit transaction number is then sent either to the requesting consumer, or the identified vendor to allow completion of the transaction.
In accordance with another aspect of the present invention, a system is provided for issuing credit as payment in a consumer transaction involving a consumer and a vendor that includes a transaction processing subsystem located at a service provider, and a consumer credit request input device capable of communicating with the transaction processing subsystem. The input device is arranged to generate a request for issuance of a credit transaction number concurrent with the consumer transaction, and send the request to the transaction processing subsystem. The transaction processing subsystem is arranged to randomly generate a unique credit transaction number if the request is acceptable, where the unique transaction number is valid only for a predetermined period of time and for the requested transaction.
In accordance with other features, the request is made using a mobile communication device such as PCs telephone, or a personal computer. The generated number can be sent either to the requesting device for manual input into a vendor credit verification system, or directly to the vendor.
In accordance with still another aspect of the present invention, a method is provided for automatic processing and payment of a transaction between a customer and a vendor which includes the steps of establishing a centralized service provider through which electronic commerce may flow, and the centralized service provider is arranged to identify both the customer and the vendor of the transaction. A purchase request is received from the customer at the centralized service provider; and a determination of acceptability of the transaction is made. If acceptable, a customer account established with the centralized service provider is automatically debited, and the vendor is automatically paid.
The above objects and other objects, features, and advantages of the present invention are readily apparent from the following detailed description of the best mode for carrying out the invention when taken in connection with the accompanying drawings.